Analysis of Politics, Philosophy and Economics from a Marxist Perspective

Sunday, 6 January 2013

Work Should Always Pay More Than Benefits

The Liberal-Tories have made
a big thing about declaring that people should always be better of
from working than not working. No Marxist can disagree with that
principle. In the
Critique Of The Gotha Programme,
Marx writes,

"Since labour is the
source of all wealth, no one in society can appropriate wealth except
as the product of labour. Therefore, if he himself does not work, he
lives by the labour of others and also acquires his culture at the
expense of the labour of others."

Its probably for this reason
that not only is it the exploiting classes who are hostile to
Socialism, but also why, those amongst what Marx calls, the
“dangerous classes”, are at least as hostile. As Marx sets out
in the Critique, no society can persist in which more is taken out
than is put in. This is the basic truth of the Law of Value.

But, of course, Marxists
come to completely different conclusions from this basic premise than
do the Liberal-Tories. For one thing, in setting out this principle
as it would apply in the first stage of Communist Society, Marx is
describing a situation of a Co-operative economy, where all work is
shared out, so that all those who want to work, and who are capable
work can have it. That is a far cry from Capitalism in Britain today
under the Liberal-Tories. Nor do the Liberal-Tories explain how this is compatible with the luxurious incomes of non-workers such as the Royal Family, or the thousands of Capitalists who do not work, but have incomes beyond the dreams of workers.

On the one hand, the fact
that workers, as a class, have been deprived of their own means of
production, creates a condition where they are only able to work with
the permission of the Capitalists, and their State. But, Capitalists
will only allow workers to work if they hand over a part of the
product of their labour without payment i.e. if they create profits
for the Capitalist! Indeed, if workers did not have to hand over
part of their production to the Capitalists without payment for it,
the workers themselves would indeed be much better off. It is not
the unemployed workers who mostly benefit from the toil of those in
work, but the Capitalists who are able to amass huge riches without
themselves having to do any work!

Unlike, the Liberal-Tories,
therefore, who conclude from the basic truth that work should always
pay more than benefits, that the solution must be to cut benefits,
Marxists conclude, from that truth, that real wages should be much
higher, and all workers should have the opportunity to work without
the condition for that being that they do unpaid work for
Capitalists! Indeed, one consequence of cutting benefits is also to
put downward pressure on wages. It is not at all in the interests of
those in work to support a cut in Benefits for the unemployed. Wages
are as susceptible to the law of supply and demand as any other
price. The more unemployed there are, the lower the incomes of the
unemployed, the greater the supply of cheap labour in the market
there will be, and consequently the greater the pressure to reduce
wages there will be. That indeed, is why the Liberal-Tories, who
represent all of the cheap-skate, small employers, who can only
survive on the back of cheap labour and poor conditions, are so much
in favour of cutting benefits for the unemployed.

Of course, the small scale,
inefficient employers and their representatives amongst the
Liberal-Tories will bemoan the fact that without these low wages, and
poor conditions they could not stay in business. But, what makes
these employers believe that society owes them a living? Why do
workers have to accept low wages and poor conditions simply so these
inefficient businesses can stay in business? No one forced these
employers to set up in business, and when they make big profits, they
do not share them with their workers.

The employers no doubt will
retort that if they went out of business their workers would lose
their jobs. That may be true, but its also possible that if they did
the workers could take over the business themselves, run it more
efficiently as a co-operative, and still pay themselves at least as
much in wages. Even were that not true, what kind of existence is it
for workers to hang on in an employment that pays them inadequate
wages on which to live, and provides them with poor conditions, all
the time living with the stress of whether they will have a job next
week or not. One argument put forward by the apologists of capital
is that profits are a reward for the capitalist taking a risk, but in
all these cases it is workers who are taking all the risks not the
capitalists.

In these cases of
inefficient small firms paying lower wages than benefits, and usually
also providing poor working conditions, they stay in business only
because of the gross exploitation of those workers, and currently
because of unsustainably low interest rates. They are among the
160,000 small firms employing around 2 million workers that have been
identified as zombie companies, who are effectively bust, unable even
to repay the capital they have borrowed from the bank, and surviving
only because of the forbearance by the banks. Realistically, it
would be better if these companies actually did go bust to put their
workers out of their misery, and so the capital tied up in them could
be used in other more efficient businesses, where workers could be
employed at more decent wages. But, the Liberal-Tories as
representatives of these small scale, inefficient capitalists prefer
to continue to place the burden of sustaining these business on their
workers through low pay and poor conditions.

It is a far cry even from
the attitude of Liberals in the past, when they represented the
interests not of these small inefficient capitalist, but of the big
efficient capitalists. In 1909, Winston Churchill, as President of
the Board of Trade introduced the first Minimum Wage. He did so
using an argument that would today be anathema to the Liberal-Tories.
He said,

“It is a national evil that any class of Her Majesty’s subjects should receive less than a living wage in return for their utmost exertions… where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad by the worst; the worker, whose whole livelihood depends upon the industry, is undersold by the worker who only takes up the trade as a second string… where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration.”

But, it is precisely this
undercutting of wages, by cutting benefits for the unemployed that
the Liberal-Tory policy is designed to achieve! That has been the
case since the arch representative of this shopkeeper mentality –
Thatcher – began the process of promoting the interests of the the
small scale, inefficient capitalists in the 1980's. The process of
“progressive degeneration” described by Churchill is precisely
what Thatcher's programme, continued by Blair, and Brown and now by
Clegg-Cameron has achieved. A low wage, high debt economy was the
corollary of the process of de-industrialisation begun in the 1980's,
and which has created today's hollowed out zombie economy. It floats
like a turd on a sea of cheap credit, ready to be sunk by the next
small wave.

Instead of the Liberal-Tory
policy of cutting unemployment benefit, a better solution would be
for them to take a leaf out of Churchill's book and introduce a
significantly higher Minimum Wage, one that would ensure that all
those in work did indeed have higher earnings than those out of work
and on benefits. A further move in that direction would be for
Britain to follow the example of the better employers in Europe who
have agreed to better working conditions for their employees in the
form of the Working Time Directive. If the EU truly is a single
market, then workers across it should benefit from having the same
pay and conditions. That should be true also of holiday entitlement,
pensions and other benefits, which are generally much better in
Europe than in Britain. Its no wonder that the even more rabid
supporters of the small capitalists, on the right wing of the Tory
Party and UKIP, want to pull Britain out of Europe, so that workers
conditions can be undermined even further. In response, Labour
should wholeheartedly commit itself to furthering workers rights, by
scrapping Britain's opt out of the Social Charter, and joining with
Workers Parties and Trades Unions across Europe in constructing a
real single market with improved pay and conditions for workers on an
equal basis across it.

The Liberal-Tory apologists
of inefficient, small capital would no doubt squeal that this would
lead to businesses closing down, unable to meet these higher wages,
and improved conditions. We heard it all before from the same
quarters in the 19th Century when they complained that a
Ten Hour Day, or the introduction of minimum standards via the
Factory Acts would lead to businesses making losses and closing down.
In fact, the exact opposite happened. With reduced hours, the
workers productivity actually rose, because they were able to work
more efficiently. When businesses had to comply with the Factory
Acts, they introduced new, more efficient production methods, which
not only saved them money, but led to increased output at lower
costs. Increased productivity, meant that both wages and profits
rose. Marx describes precisely that situation in respect of the
North Staffordshire earthenware manufacturers.

“In
1864, however, they were brought under the Act, and within sixteen
months every “impossibility” had vanished.

'The
improved method,” called forth by the Act, “of making slip by
pressure instead of by evaporation, the newly-constructed stoves for
drying the ware in its green state, &c., are each events of great
importance in the pottery art, and mark an advance which the
preceding century could not rival.... It has even considerably
reduced the temperature of the stoves themselves with a considerable
saving of fuel, and with a readier effect on the ware.'

In spite of every prophecy, the cost-price of earthenware did not rise, but the quantity produced did, and to such an extent that the export for the twelve months, ending December, 1865, exceeded in value by £138,628 the average of the preceding three years.” (Capital I, Chapter 15 p 447)

And Marx describes in
Capital I, Chapter 22
how despite providing far worse conditions, and wages only half those
in Britain, the more retarded European capitals were unable to
compete with their British rivals. It was not low wages that
provided low prices, but the application of more, better instruments
of labour, and more efficient methods of production. Similarly, at
the start of the last century, Henry Ford massively increased the
wages of his workers and provided them with welfare benefits, and
thereby improved efficiency and productivity, resulting in lower
costs of production.

As Marx points out, David
Ricardo had noted that it is only when wages rise beyond a certain
level that an impetus is given to Capital to replace Labour with
machines and thereby to improve productivity and efficiency. A
precondition for raising the efficiency of British industry is to
stop providing Corporate Welfare and protectionism for the
inefficient companies, including the prop provided by low wages and
poor conditions for workers, so that they are forced to invest in new
machinery etc., and to improve their efficiency. A high level of
Minimum Wage set at least at two-thirds of the average wage of
£25,000 p.a. would be a start in that direction.

But even that is not
ultimately high enough. As Marx sets out in Capital, the Value of
Labour-Power is determined not just by what is needed for the
reproduction of existing workers, but what is required for the
production of the next generation of workers i.e. enough for workers
to bring up children. On average that means enough to rear two
children per family. Wages should as a minimum be set at that level.
On that basis wages are high enough to mean that there is no
requirement for wages to be supplemented by benefits i.e. there is no
need for a large bureaucratic state simply to take taxes from some
workers in order to pay them as benefits to other workers.

The idea of Welfarism i.e.
the intervention of the State to provide support for individuals or
companies was anathema to Marx and Engels. The whole of the Critique
of the Gotha Programme is devoted to opposing that approach adopted
by the Lassalleans. Marx not only saw it as demeaning for the
working class, undermining its need to stand on its own feet, and
assert its independence from that State, but also saw it as Utopian,
not just for Capitalist society, but also for the first stage of
Communist Society. Welfarism essentially seeks to level up
individuals or companies, by setting minimum levels. In doing so, it
provides the worst of all worlds. The minimum levels are so minimum
that they simply keep those bound by them in a miserable condition.
Even then, many fall below these minimum levels. In the meantime in
order to provide the support for these minimum levels, resources have
to be taken from elsewhere, where they could have been used more
effectively.

Marx rejects the idea that
even in the first stage of Communism workers could even take out as
much as they had put in to national production, let alone that such a
society could provide real equality for all workers.

Showing that workers could
not consume the full fruits of their labour, Marx writes,

“Let us take, first of all, the words "proceeds of labour" in the sense of the product of labour; then the co-operative proceeds of labour are the total social product.

From this must now be deducted: First, cover for replacement of the means of production used up. Second, additional portion for expansion of production. Third, reserve or insurance funds to provide against accidents, dislocations caused by natural calamities, etc.

These deductions from the "undiminished" proceeds of labor are an economic necessity, and their magnitude is to be determined according to available means and forces, and partly by computation of probabilities, but they are in no way calculable by equity.

There remains the other part of the total product, intended to serve as means of consumption.

Before this is divided among the individuals, there has to be deducted again, from it: First, the general costs of administration not belonging to production. This part will, from the outset, be very considerably restricted in comparison with present-day society, and it diminishes in proportion as the new society develops. Second, that which is intended for the common satisfaction of needs, such as schools, health services, etc. From the outset, this part grows considerably in comparison with present-day society, and it grows in proportion as the new society develops. Third, funds for those unable to work, etc., in short, for what is included under so-called official poor relief today.”

But, Marx also shows why even under this first stage of Communism the ideas of Welfarism are Utopian. There is no reason why someone who chooses to have children, for example, should seek to be compensated for that by some kind of benefit, as opposed to some other workers who choose not to have children. Marx makes this clear,

“Accordingly, the individual producer receives back from society -- after the deductions have been made -- exactly what he gives to it. What he has given to it is his individual quantum of labour. For example, the social working day consists of the sum of the individual hours of work; the individual labour time of the individual producer is the part of the social working day contributed by him, his share in it. He receives a certificate from society that he has furnished such-and-such an amount of labour (after deducting his labour for the common funds); and with this certificate, he draws from the social stock of means of consumption as much as the same amount of labour cost. The same amount of labour which he has given to society in one form, he receives back in another.”

Of course, what Marx is referring to here is not hours of concrete labour, but of Abstract Labour. Ten hours labour by a brain surgeon is not the same as ten hours of labour from a joiner, and any society that tried to equate the two would quickly find that it was under producing brain surgeon's and over producing joiners! But, the substantive point is that two joiners who did ten hours work, would be entitled to ten hours equivalent back, irrespective of their individual circumstances. Just because one had children, and the other didn't would not be a reason for one to receive an additional entitlement.

Marx continues,

“Hence, equal right here is still in principle -- bourgeois right, although principle and practice are no longer at loggerheads, while the exchange of equivalents in commodity exchange exists only on the average and not in the individual case.

In spite of this advance, this equal right is still constantly stigmatized by a bourgeois limitation. The right of the producers is proportional to the labour they supply; the equality consists in the fact that measurement is made with an equal standard, labour.

But one man is superior to another physically, or mentally, and supplies more labour in the same time, or can labour for a longer time; and labour, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. This equal right is an unequal right for unequal labour. It recognizes no class differences, because everyone is only a worker like everyone else; but it tacitly recognizes unequal individual endowment, and thus productive capacity, as a natural privilege. It is, therefore, a right of inequality, in its content, like every right. Right, by its very nature, can consist only in the application of an equal standard; but unequal individuals (and they would not be different individuals if they were not unequal) are measurable only by an equal standard insofar as they are brought under an equal point of view, are taken from one definite side only -- for instance, in the present case, are regarded only as workers and nothing more is seen in them, everything else being ignored. Further, one worker is married, another is not; one has more children than another, and so on and so forth. Thus, with an equal performance of labor, and hence an equal in the social consumption fund, one will in fact receive more than another, one will be richer than another, and so on. To avoid all these defects, right, instead of being equal, would have to be unequal.

But these defects are inevitable in the first phase of communist society as it is when it has just emerged after prolonged birth pangs from capitalist society. Right can never be higher than the economic structure of society and its cultural development conditioned thereby.

In a higher phase of communist society, after the enslaving subordination of the individual to the division of labour, and therewith also the antithesis between mental and physical labour, has vanished; after labour has become not only a means of life but life's prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly -- only then then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!”

In fact, as Lenin points out in “The State and Revolution”, nowhere does Marx guarantee that this higher stage of Communism, where this real equality would attain, is even possible. Yet, Welfarism bases itself on the idea of a bastardised notion of “From each according to his ability, to each according to his needs!” even within the confines of Capitalism!

It is bastardised, because it is not, and cannot be any kind of equality, but also even the miserable relief it offers is only made possible by taking from one group of workers to give to another! It is the worst of all worlds; economically inefficient, providing no real relief, and at the same time Utopian in its aims.

For those reasons Marxists reject Welfarism just as they reject other forms of Protectionism such as Nationalisation by the Capitalist State, Import Controls, and Immigration Controls. But, for so long as Capitalism persists workers wages will continue to be determined by the laws of supply and demand for labour. Workers have to find ways of dealing with that limitation. As Marx put it, in Value, Price and Profit,

“They ought, therefore, not to be exclusively absorbed in these unavoidable guerilla fights incessantly springing up from the never ceasing encroachments of capital or changes of the market. They ought to understand that, with all the miseries it imposes upon them, the present system simultaneously engenders the material conditions and the social forms necessary for an economical reconstruction of society. Instead of the conservative motto: “A fair day's wage for a fair day's work!” they ought to inscribe on their banner the revolutionary watchword: “Abolition of the wages system!"”

What are these “material conditions” and “social forms” that make possible this reconstruction of society? They are as Marx sets out in Volume III of Capital, the Workers Co-operatives, and the Credit System. The more workers respond to the failure of capitalist businesses by setting up their own co-operatives, the more workers are taken out of the circuit of capital, and at the same time those workers do not fall into the reserve army of labour, pressing down on the wages of other workers. On the contrary, the fact that workers in a Co-operative do not have to hand over a part of their product to the capitalist means they can improve their pay and conditions, whilst still investing in improving their efficiency. That in itself begins to put an upward pressure on all wages and conditions. As Marx put it in his Inaugural Address To The First International,

“The value of these great social experiments cannot be overrated. By deed instead of by argument, they have shown that production on a large scale, and in accord with the behests of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolized as a means of dominion over, and of extortion against, the labouring man himself; and that, like slave labour, like serf labour, hired labour is but a transitory and inferior form, destined to disappear before associated labour plying its toil with a willing hand, a ready mind, and a joyous heart.”

But, on an incremental basis their progress would be too slow. Instead, the example they engender has to be the basis of the workers seeking to develop such Co-operative production on a nation (today at least European) basis. The means of achieving this is the Credit System, Marx says, and today, it would be via the vast sums available in the workers Pension Funds, if we were to gain control over them. In Capital III - Chapter 27 , Marx wrote,

“The credit system is not only the principal basis for the gradual transformation of capitalist private enterprises into capitalist stock companies, but equally offers the means for the gradual extension of co-operative enterprises on a more or less national scale. The capitalist stock companies, as much as the co-operative factories, should be considered as transitional forms from the capitalist mode of production to the associated one, with the only distinction that the antagonism is resolved negatively in the one and positively in the other.”

This is one basis upon which Marxists would propose raising workers wages and conditions, so that work paid more than benefits. But, again, so long as Capitalism persists, so unemployment will persist, and will continue to put downward pressure on wages. So, it is necessary to minimise that effect. The best way is to ensure that unemployed workers are not starved into accepting low paying jobs. That means that Unemployment Benefits must be set at a level that allow workers to avoid that. But, of course, there is no reason the Capitalist State will do that. On the contrary, as with the Liberal-Tory proposals now, it is precisely when workers need decent unemployment benefits that the State will seek to cut them. It is one reason that we cannot rely on the State, and why instead we have to build a worker owned and controlled alternative.

In the 19th Century, alongside their Trades Unions, the workers built their own Friendly Societies whose purpose was to provide them with their own Social Insurance Scheme to cover periods of Sickness, Old Age and Unemployment. Marx, Engels and the First International saw such organisations as precisely the kind of self-activity, and self-government of the workers that was required. They demanded that the Capitalist State keep its claws off the funds in these organisations. In the Programme Of The French Socialists Marx called for such funds to be returned to the ownership and control of the workers themselves.

When the German SPD proposed a National Insurance Scheme to take over these functions, therefore, in the Erfurt Programme, Engels opposed it writing,

“Here I want to draw attention to the following: These points demand that the following should be taken over by the state: (1) the bar, (2) medical services, (3)pharmaceutics, dentistry, midwifery, nursing, etc., etc., and later the demand is advanced that workers’ insurance become a state concern. Can all this be entrusted to Mr. von Caprivi? And is it compatible with the rejection of all state socialism, as stated above?”

It is clearly not practical to scrap all National Insurance Schemes in one fell swoop, but Trades Unions do still operate such schemes, as do the Co-operatives. Taking control over Workers Pension Funds would be a very powerful start on workers regaining control over these important aspects of their lives, and dragging them away from the grasp of Capital and its State. Developing Co-operative production in other important areas such as Health and Social Care would also open the means of transition away from State Capitalist control over welfare provision.

A national, or preferably EU wide, worker owned and controlled, Social Insurance Scheme, could provide workers across Europe with a powerful lever, and the means of introducing common benefits across the European economy. Of course, it should operate on the basis described by Marx in the Critique of The Gotha Programme. In relation to Unemployment Benefit, it should provide a high level of protection, but the principle “He who does not work, neither shall he eat”, should still apply. In return for receiving Unemployment Benefit, recipients would be required to contribute something in return. Unlike Capitalist Workfare Schemes, the principle would be to contribute to the needs of society in the form of support for the workers organisations. That could be work provided by the Workers Co-ops, or it could be other forms of activity such as practical support for workers on strike and so on.

In establishing these forms of worker owned and controlled organisations, the workers can provide their own solutions to the question of how to ensure that work always pays more than benefits. They can do so in ways that undermine the attempts of Capital to use unemployment to divide the working class, so that they can cut wages.

About Me

Left school at 16. Became an ASTMS shop steward at 19, and a lifelong trade union activist. Delegate to North Staffs Trades Council 1974-87. Secretary North Staffs Miners Support Committee 1984-5. President North Staffs Trades Council 1985-6 and 1986-7. Delegate to Staffordshire Association of Trades Councils 1985-7. Delegate West Midlands Regional Council of the TUC 1985-7. Secretary Newcastle UNISON 2000-2.
Member of the International Communist League/Workers Socialist League 1974-87.
Went to University as mature student at age of 24. Obtained Joint Honours Degree in Economics and Politics with Philosophy and Statistics, followed by a Post Graduate Certificate in Education.
Labour Party member since 1974. Stoke City Councillor 1983-4, expelled from Labour group 1983, and resigned from Council in 1984 because of refusing to vote for rent and rate rises, and budget cuts. Staffordshire County Councillor 1997-2005.
Assistant Secretary Stoke District Labour Party 1981, and held pretty much every position from Executive member, to Branch Secretary, and Branch Chair.